The Center for Community Capital on occasion publishes blog posts written by CCC Graduate Fellows. This post, written by Celeste Kathleen (MSW 2021) & Keiyitho Omonuwa (MPH 2020) analyzes the pattern of rising costs in higher education across the nation.
The Space Race catapulted the shift of federal funding from grants to loans. After Sputnik first orbited the earth in 1957, Americans began to think that their education system was lacking in comparison to other countries. As a result, the National Defense Education Act was passed to increase federal funding to higher education through loans, to increase overall enrollment in higher education. Although touted as being one of the most “successful legislative initiatives in higher education,” it can be argued that the National Defense Education Act also spurred legislation that prioritized loans over grants (Senate Historical Office, n.d.). The Higher Education Act (HEA), enacted in 1965, led to the implementation of multiple financial aid programs to support individuals pursuing higher education (Hegji, 2018). Specifically, Title IV of the HEA implemented federal grants, loans, and work-study (National Center for Education Statistics, 2019). Much of the legislation created in the 1960s and 70s was meant to help low- and middle-income students with affording higher education, yet in the late 1970s, there was a growth in lending practices. The Lumina Foundation argues that starting in the 1970s, there has been a surge of federal loans due to the rise of college costs, the creation of state loan guarantee agencies, and the increased access to loans. Some of the legislation directly related to a shift in federal funding started with the National Defense Education Act and was reinforced with the HEA Reauthorization Act. The HEA Reauthorization Act led to the creation of the Student Loan Marketing Association, which bought loans from lenders to add more capital to the Guaranteed Student Loans Program (Lumina Foundation, n.d.).
Like financial aid provided directly to college students, financial support given directly to institutions of higher education has also experienced a similar shift. Since 1990, federal spending on education has grown while state funding has declined. Federal funding has primarily focused on providing financial assistance to individual students, seen in the implementation of the Pell grant program, while state funding primarily pays for the general operations of public institutions. Also, higher education institutions receive around $26.5 billion in research grants in the pursuit of research projects and developments (The Pew Charitable Trusts, 2019). In 2016-17, the Pell grant program provided over $26.6 billion to at least 7.1 million college students (Chingos, 2018). In 2017-18, $153.5 billion was provided to support individuals seeking higher education, yet the amount of dollars dedicated to offsetting the financial burden of attending college has fluctuated over time (Baum, Ma, Pender, & Libassi, 2018). Economic downturns have significantly impacted both state and federal funding for higher education with one major consequence being the increased number of college students who qualified for needs-based financial assistance (The Pew Charitable Trusts, 2019).
Funding for North Carolina colleges and universities and their students has changed greatly over the last hundred years. In 2017, the UNC system received 41% percent of its operating budget, almost $3 billion, from the state legislature, which shifted to $2.9 billion in 2018 equaling about 13% of NC’s total budget (Robinson, 2019). The UNC system also receives 22% of all state dollars set aside for education. This equates to about $13,000 per student (Quinterno, 2019). Though the amount of funding has increased greatly, tuition costs have also continued to rise. In 1962, the average cost of in-state tuition in North Carolina was $87.50 per semester. If adjusting for inflation, that cost in 2014 would be between $600-$700 (Moore, 2015). But in 2014, that same semester actually cost $3,211.50. A couple of universities in North Carolina receive funding through the Morrill Act of 1862, which established Land Grant Universities. This funding provided land and focused dollars on schools emphasizing agriculture, mechanical arts, and military science (Lee & Keys, 2013). Even with many funding sources, direct scholarships and grants for students often fall short of covering costs. Forty-two percent of UNC-system students receive financial aid of some kind. Loans represent 27% of what is offered, and the rest is a combination of grants and scholarships. The average amount of financial aid offered to students is $13,677, with more being offered to those whose families make under $30,000 per year (College Factual, n.d.). Both costs and the state funding continue to rise, but it is important to note the gaps between the costs students face and the amount of funding provided.
As of August 2019, over 44 million Americans have outstanding student loan debt, totaling more than $1.5 trillion (Thune & Warner, 2019). For North Carolina specifically, the average student loan borrower owes more than $25,000 (NC Department of Justice, 2019). Competition, rising costs, and increased access to loans have all contributed to the amount of student loan debt in America. Although loans were initially introduced to increase access to higher education, student loan debt has been normalized to increase overall enrollment in higher education. But at what cost?
Baum, S., Ma, J., Pender, M., & Libassi, C. J. (2018). Trends in Student Aid 2018. The College Board. https://research.collegeboard.org/pdf/trends-student-aid-2018-full-report.pdf
Chingos, M. M. (2018). Simplifying grants for college students: Who wins and who loses? https://www.brookings.edu/research/simplifying-grants-for-college-students-who-wins-and-who-loses/
College Factual. (n.d.). University of North Carolina at Chapel Hill Financial Aid & Scholarships. https://www.collegefactual.com/colleges/university-of-north-carolina-at-chapel-hill/paying-for-college/financial-aid/
Hegji, A. (2018). The Higher Education Act (HEA): A Primer. Congressional Research Service.
Lee, J. M., & Keys, S. W. (2013). Land-Grant But Unequal | State One-to-One Match Funding for 1890 Land-Grant Universities. Association of Public and Land-Grant Universities, The Office for Access & Success. https://www.aplu.org/library/land-grant-but-unequal-state-one-to-one-match-funding-for-1890-land-grant-universities/file
Lumina Foundation. (n.d.) A History of Federal Student Aid. (n.d.). https://lookingback.luminafoundation.org/
Moore, J. (2015). The Cost of College: An Issue Then and Now . https://blogs.lib.unc.edu/uarms/index.php/2015/05/the-cost-of-college-an-issue-then-and-now/
National Center for Education Statistics. (2019). The Condition of Education – Postsecondary Education – Finances and Resources – Loans for Undergraduate Students – Indicator May (2019). https://nces.ed.gov/programs/coe/indicator_cub.asp
NC Department of Justice. (2019). Paying For College. https://ncdoj.gov/protecting-consumers/college-consumers/paying-for-college/
Quinterno, J. (2019). How the “open doors” stay open: Funding North Carolina’s community colleges – NC Center for Public Policy Research. https://nccppr.org/how-the-open-doors-stay-open-funding-north-carolinas-community-colleges/
Robinson, J. (2019). Did You know? The North Carolina Legislature Provides 41% of the UNC System’s Operational Funding — The James G. Martin Center for Academic Renewal. https://www.jamesgmartin.center/2019/09/did-you-know-the-north-carolina-legislature-provides-41-of-the-unc-systems-operational-funding/
Senate Historical Office. (n.d.) U.S. Senate: Sputnik Spurs Passage of the National Defense Education Act. https://www.senate.gov/artandhistory/history/minute/Sputnik_Spurs_Passage_of_National_Defense_Education_Act.htm
The Pew Charitable Trusts. (2019). Two Decades of Change in Federal and State Higher Education Funding | The Pew Charitable Trusts. https://www.pewtrusts.org/en/research-and-analysis/issue-briefs/2019/10/two-decades-of-change-in-federal-and-state-higher-education-funding
Thune, J., & Warner, M. (2019). How Congress Can Ease Americans’ $1.5 Trillion Student Debt | Time. https://time.com/5662626/student-loans-repayment/
Topics(s): Economic Mobility, Higher Education, Voices of Student Loan Borrowers